there should be some list somewhere of what you can play, and i think you also need like an xbox live connection to play them, thats what the xbox guy told me i think, or maybe that was just to have the latest system version idk

You at least need a hard drive because that is where all the Xbox compatibility files are stored. I'm not sure about LIVE, just update (unless you've got a JTAG capable system, of course) and you should be able to play them.

You'll need to be connected to xbox live the first time so it can download the emulation profiles, but after that you shouldnt need to be online. I play original xbox games on mine(Jasper, not slim) offline all the time without issues.